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Farm marketing plans

John Yost Published on 31 May 2010

Whether it is a conscious action or not, we are all engaged in risk management planning. Prepaying for seed and fertilizer, planning crop rotations, farming in multiple locations and signing up for crop/farm insurance are all considered risk management activities.

With all the effort typically put into risk management, I am still surprised at how many producers say their marketing plan is all in their head.

It is difficult to stress how important, and valuable, a written marketing plan can be. Written marketing plans give you a frame work for making marketing decisions and allow you to analyze what was successful or what could be done better. The plan can be broken down into six areas:

1. Goals
Typical plans begin with a statement of short- and long-term goals. By expressing your goals, you are able to reflect on what you are trying to do. This would include your cost of production, cash flow projections, needs related to business expansion and profitability, retirement savings, college expenses and household needs.

2. Resources
After you have identified your price goals, you should make a list of your resources. What crops, and how many acres of each, will you plant in the coming year? What is your expected production? What is the highest/lowest production you could expect? How much on-farm storage do you have? Will you be utilizing crop insurance? What marketing tools are you comfortable utilizing? What percent of the crop are you comfortable marketing in advance, and how far in the future are you willing to go?

3. Market outlook
Next you should include a statement relating to your market outlook. We are all guilty of getting caught up in the “coffee shop talk.” While these discussions can be profitable, it is important to put in writing what you believe will happen. After all, this will justify your marketing timeline and guide your ultimate decision of whether or not to make a sale.

4. Timeline
At this point you can take all the information and begin identifying when to make your sales. This will include target dates, volume of product to market and what tools you will utilize to make the sale. As you make sales, record what you did and provide an explanation of any deviations from the plan.

5. Strategies
This is where you record your “What if” thoughts. What will you do if the market surges above, or falls below, your price expectations? Are you willing to market more of your crop if price climbs? How much more? If price falls, how long are you willing to wait before you make another sale? What will you do with the crop that you cannot store on farm?

6. Evaluation
As you move through the marketing year, and at the end of your marketing year, go back and evaluate your plan. Determine if your sales satisfied your cash flow needs. Did the market follow your expectations? Were the marketing tools you utilized the best to “take what the market gave you”? In the end, don’t be a slave to the plan, but allow it to guide your marketing decisions.  FG

Excerpts from Ohio Ag Manager, February 2010

John Yost
Extension Educator
Ohio State University